EPA Lifts Emissions Limits on Power Plants & Hyrox Finds Itself in a Stinky Situation

0:01Are you sucking wind from trying to keep up with AI and its impact? Take a breather and tune in to The Intelligence Shift, Morning Brew's new podcast with PwC. It bridges the gap between big picture AI concepts and what it actually means in practice. Host Dan Priest is joined by expert guests to discuss AI's role in sports, music, HR, and more. Listen to The Intelligence Shift wherever you get your podcasts.

0:25Toby:Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the EPA lifts power plant emissions limits, delighting the coal industry but enraging environmentalists. Then, High Rocks found itself in a sticky and stinky situation this past week. It's Tuesday, September 15th. Let's ride.

0:50Toby:There are more than 8.3 billion people alive today, but you can become the best at one particular skill as long as it's random enough. That's my takeaway from the Guinness World Records, which revealed some fresh records found in its 2027 book. There's the five-year-old from Houston who became the world's youngest female yoga instructor after completing a 200-hour training course, or ephemeral Remy, the most tattooed living person after applying ink to some areas of his body over 100 times, or the narrowest drivable car, a rebuilt Fiat Panda measuring less than 20 inches wide. Toby, something tells me you're the kind of guy who's tried to break a Guinness World Record at some point in your life.

1:31I grew up collecting Guinness Book of World Records. One, because I just loved how they looked, all the different colors lined up. I also loved memorizing mostly the animal facts for whatever reason. I always know that the hawk moth is the fastest airborne insect, but it did get me thinking, what could Toby Howell set a Guinness Book of World Record and I think it has to be a Venn diagram of two things because it's hard to be the best in one thing. But if you took the fastest marathon and lowest golf round completed in one day, I think I got a shot because the Venn diagram of people who can break three and break par must be small.

2:06So that's exactly where my mind went.

2:08Toby:Do you know how the application process goes or like how can you just submit literally anything like that? I think to have it verified, you pay, that's how they make their money. you need someone to come and verify that you did everything properly. So that's one thing. But I think you can also do something and then retroactively submit it as well. It also had me thinking about you, Neil. Any ideas of what you could call that? I'll have to think about it more. Nothing comes to mind. I'm just the average Joe at literally everything. But I was going through some of these, and one woman set the record for most frog-related memorabilia, another one for most My Little Pony memorabilia.

2:43So just start collecting something now. Now in 50, 60 years, you'll have the Guinness Book of World Records. And now a word from our sponsor, Hotels.com. Neil, don't even ask me about the hotel I stayed at last week for work. Why?

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3:28Sign up for their free rewards program and start earning on every work stay at hotels.com slash morning brew. That's hotels.com slash morning brew. Loyalty members 18 plus.

3:41Toby:President Trump's EPA wants power plants to let it rip. Carbon emissions be darned. Yesterday, the Environmental Protection Agency announced it would lift a cap on planet warming greenhouse gas emissions spewed by coal and natural gas plants with the goal of saving over$300 billion and unleashing an abundance of American energy. For the two most recent Democratic presidents, Joe Biden and Barack Obama, this is like having all your work wiped out by a computer before you saved it. Their tenure saw the government tighten emissions requirements from power plants to cars to prevent climate change from spiraling out of control.

4:14Toby:In 2024, the Biden administration finalized a rule that required coal plants to add technology that would collect and trap emissions before they were released to the air while forcing gas plants to operate on cleaner fuels like hydrogen. These rules were opposed by the oil and gas industry and Republicans who accused Biden of regulating the coal, oil and gas industries out of existence. Trump, who has called climate change a hoax, has pursued an agenda of so-called energy abundance that scrapped dozens of climate-focused policies and promoted fossil fuel production. Critics from the energy, environmental, and public health spaces blasted the move.

4:48Toby:Zeeland Hoover, a former EPA senior advisor under Biden, told The Washington Post that, quote, by eliminating the power plant pollution standards, Trump is choosing to allow preventable asthma attacks, heart disease, and even deaths. Former Vice President Al Gore said the EPA's action moves the U.S. in the exact opposite direction of the rest of the world. One thing's for sure, this will be challenged in court imminently. So let's go back to Biden's EPA for a second. He approached this issue by looking through the health benefits that could potentially be accrued by having stricter emission standards.

5:21And he's found through 2047,$120 billion would be saved by Americans when it comes to ER visits, when it comes to asthma attacks, when it comes to missed school days, lost work days. That was kind of how he approached and his EPA approached this regulatory environment. The Trump EPA has taken a much different approach, looking more to the regulatory cost benefit analysis. And instead of assigning these public health benefits, he looked instead at emphasizing compliance costs to businesses. So they are both trying to create some sort of economic argument for why they should approach regulations in their specific way.

6:01But it's very different in how practically you go about it with whatever number it creates. Biden's was$120 billion in saved health costs. Trump will be the innumerable billions saved to the energy industry as they try to spin up new power plants.

6:16Toby:And this is a big question, because when it comes to what are the big polluters in the United States around the world? Well, coal, gas and oil fired power plants are a huge one. They're responsible for about one quarter of the country's total climate pollution. Second, only to the transportation sector. If the U.S. power sector were a country, its pollution production would rank fifth globally behind just China, India, Russia and the entire United States. The Trump administration, this is not the first deregulatory move that they've taken since last year. This EPA has done a ton of cutting of, they would say, of the red tape.

6:55Toby:Opponents would say you're letting fossil fuels flourish. They've eliminated emission standards for cartel pipes, lifted restrictions on chemicals using air conditioners and refrigerators. Perhaps the big kahuna earlier this year, they repealed the overall scientific determination that gave the EPA the legal authority in the first place to create climate regulations. This is already a big deal. It's only become bigger because power plants are going. The demand on power is only increasing after because of the AI build out data centers, advanced manufacturing for decades. Demand in the United States for power was literally flat.

7:32Toby:And then all of a sudden we're seeing this exponential growth. So the question of how power plants are regulated is coming to the fore. Yeah, the fact that environmental groups are very up in arms that the EPA has effectively declared America's second largest individual source of greenhouse commissions not significant enough to warrant CO2 regulation. One attorney fighting this or that plans to fight this, David Doniger, said it's like saying that over half of a super large pizza has no calories. That's the general kind of position that you're going to see a lot of people taking against this new regime at the EPA.

8:08Moving on, the sudden unity around slowing AI development has hit the AI trade hard, wobbling the foundations that have propped up the stock market. Yesterday, the NASDAQ opened down more than 1 % with chip stocks taking a bruising as investors digested the dire warnings issued by Dario Amadei and echoed by Sam Altman around the need to hit the brakes on frontier model development. Intel, Micron, and AMD fell around 5%, NVIDIA lost 3%, and shares of one of OpenAI's largest investors, SoftBank, plummeted nearly 11%. Outside the market, China jumped into the fray to defend itself against Dario Amadei's claim that a Chinese lead in AI would pose a grave danger to the world.

8:48Beijing accused the Anthropic CEO of fear-mongering and said confrontation will only make global AI governance harder. President Trump, meanwhile, is also resisting calls to slow down, saying whoever wins AI wins, and made a surprise phone call to NVIDIA's Jensen Huang on stage at a tech conference, telling the audience via speakerphone that the anti-AI messaging is, quote, all a hoax. And somehow that wasn't even the strangest political move we got yesterday. Bernie Sanders and former Trump chief strategist Steve Bannon will appear together today at a pro-human assembly, pushing for humans to remain firmly in control of AI.

9:27So Neil, in summary, stocks puked. China doesn't like how they are being portrayed. And we have a political equivalent of pigs flying with Bannon and Bernie teaming up.

9:36Toby:Yeah, I do want to focus on Trump because he really is the linchpin on whether the government takes action on this particular issue. If he presses forward saying we need AI regulation, then you would think that the House would follow in lockstep. He posted at least seven times on this particular issue, more than even tech people, saying that, yes, the idea that frontier AI models will go rogue was all a hoax and blasted Dario Amadei, the CEO of Anthropic, for bringing this issue up in the first place. And then in this truly shocking moment, you can watch video on it. NVIDIA CEO Jensen Huang's on this stage at the All In Summit, which is this very popular tech podcast.

10:19Toby:And he just gets a call from Trump, puts him on speakerphone. And then Trump says the robots will not be taking over. The AI will not be taking over the rest of the world. The whole thing is a hoax. Jensen followed that up by saying he kind of agreed with Trump. Of course, he was a little more measured. He said that predictions that AI could end the world was not grounded in science. So what Trump is saying is echoed by some people in the tech industry, of course, with skin in the game. We saw NVIDIA shares fall yesterday. So maybe that's one reason why Jensen Huang does not believe these predictions that we need to slow down AI development.

10:53It's also funny. The other kind of party that is echoing this sentiment that fears around AI safety are hoax or it's fear mongering is China. They are aligning themselves with each other. Trump and China weirdly are agreeing upon this one singular issue in addition to Jensen Huang. So that's a very weird triumvirate there. Let's talk a little bit about the stock market, though. The idea of AI development slowing down was not happy for these neocloud, these chip providers. We saw actually the greatest divergence between chip stocks today and software stocks in history. Software stocks, remember, have been pummeled over the last few months.

11:34As everyone was scared that people will be able to spin up replacements for ServiceNow, spin up replacements for Salesforce, that has depressed software stocks. But yesterday, we saw ServiceNow jump 7%. We saw Salesforce rise nearly 5%. It moves in tandem and inversely of how chip stocks are doing. So when you see the AI trades start to wobble, you see software stocks come roaring back, which is what we saw yesterday. But meanwhile, AI wasn't the only thing affecting the market. Oil prices also just kept climbing with Brent crude dropping$107 a barrel. It comes after drone attacks shut down a key Saudi pipeline that was helping the country bypass the Strait of Hormuz and Houthi rebels in Yemen captured two more islands in the Red Sea.

12:23That shock manifested in the bond market where 10-year treasury yields hit 5 % Monday for the first time since 2023. and outside of that brief appearance, it's a level we haven't really seen since 2007. The 10-year is a benchmark for borrowing costs across the economy, which means everything from car loans to mortgage rates will get more expensive, with a standard 30-year mortgage crossing 7 % yesterday as well. 5 % treasuries also create a much tougher backdrop for stocks. Investors now get a substantial return from government bonds without taking on the additional risk found in equities, which means this market sell-off could get worse before it gets better.

13:01Toby:I'm always looking for the most drama storyline, and there is one here. This is Treasury Secretary Scott Bessent versus bond investors, which they should make into a TV show. We're going to talk about what happened at the Emmys last night, but I'm looking forward to this next year. So Bessent came in to the Trump administration wanting to bring down bond yields. That was one of his main goals. And he has pursued that agenda by doing very unusual things that the Treasury has done in recent years, which is like intervene in the yen market and buy an increased buybacks of these government bonds, long dated bonds that has not worked.

13:39Toby:And we're seeing bond yields now hit 5 % for the first time in a couple of years. And we're back at levels that we've only seen in the 90s and 2000s. Meanwhile, Scott Besson has gone to war against bond investors in particular media interviews in the past few days. First of all, he said, it's my dream. I have asymmetric information. I am the house now, which is kind of a mic drop moment when talking about his particular interventions. And then recently he said, if some of the Bloomberg terminal bros are unhappy with what I'm doing, well, that's too bad. So he's trying to do one thing. Bond investors are pushing yields up doing the other thing.

14:15Toby:So we're having quite a war of words between these two groups right now. And the reason why the market is nervous about 5 % yields is because the average S &P 500 return over the past 50 years is right around 8%. You can now lock in effectively 60 % of that gain via buying 10-year treasury notes, taking on little to no risk. Again, this is called the risk-free rate of return. That is why you get a little bit of wobbliness in the market, because why would you take the risk of investing in something like a chip stock when you couldn't just lock in 60 % of that for free, for no risk whatsoever? That is one thing.

14:54But the other thing is that the market is still somehow up 10 % this year, because a lot of people think that the 5 % yield doesn't actually mean what it's meant in the past, because corporate earnings are so strong. The economy underlying data is actually pretty strong as well, which is why you're seeing a little bit of a divergence between equities in what you would expect, given how high the 10-year yield is right now. All right, we're going to take a quick break and come back with a story about malls right after this. Every day, shareholders meet to discuss important matters about the companies you invest in.

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15:55Toby:Toby, you sure seem chipper for someone who stayed up till four. That's because despite a couple Long Island iced teas, I took Z-Biotics pre-alcohol. It produces an enzyme that helps break down the toxic byproduct alcohol creates in your gut that leaves you feeling less than fresh. It was invented by PhD scientists to tackle rough mornings after drinking. I owe those scientists my life. Head to zbiotics.com slash MBD and use the code MBD at checkout for 15 % off. That's zbiotics.com slash MBD. September is World Alzheimer's Month, but most people never check their brain health until something's feeling off or wrong.

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17:09Toby:That's functionhealth.com slash brew code brew25. Things you might not have heard in a while. Both the New York Jets and Giants are 1-0 and shopping malls are low-key crushing it. According to the Wall Street Journal, mall values are up 13 % this year, the best performing of all 10 commercial property sectors after years of slumping along. Simon Property Group, the largest mall owner in the U.S., just hit a new record high on the stock market for the first time since 2016, and its shares have outperformed the S &P 500 over the past year. Part of the reason malls are doing so well from a valuation perspective is that the other commercial real estate sectors are struggling, specifically multifamily and office.

17:48Toby:So investors looking for return are parking, no pun intended, their money in malls, one of the few bright spots. Another factor is that mall owners have cleverly adapted to the new paradigm, bringing in tenants focused on recreation like pickleball courts, luxury stores, and buzzy dining spots like Dumpling Giant, Din Tai Fung. Toby, meet me at the mall? I think so. It seems pretty fun these days. They did just nail this pivot to experiential content very well. This has been something that we haven't talked about that people want to get outside and actually do something. And I think the company that kind of sums us up well is Netflix.

18:27Netflix was started as a way to watch movies from your couch and inside your own home. Now they are buying up space in malls to create these big Netflix house experiences. You can walk in and experience Stranger Things Live. You can walk in and experience things like One Punch. They have these interactive exhibits that are taking place in malls. And that to me just sums up why maybe Americans are returning to the place where you used to congregate as a kid. because shopping in person is a little bit more fun than shopping online. Again, they're not back to their absolute peaks, but it is showing signs of flickering life.

19:04Toby:Yeah, I think what the big data point here is that 200 malls have closed since 2008 and there's only 900 left. So at one point, there was just so many malls, there was too much real estate, there was too much square footage for what the demand for physical shopping offered. So the reason why this is a tightening real estate market, a commercial real estate market for malls, why valuations have increased is just we're kind of normalizing back to levels where we should be here in 2026. We are repurposing spaces. Like, I think it's very telling about what those properties were at Netflix spot. They moved into a former Lord and Taylor in King of Prussia, Pennsylvania.

19:40Toby:Now it's a Netflix space. And then in Dallas, they moved into a former Belks and now it's a Netflix space. So these are department stores that created vacant spaces. But now these new tenants are moving in. I just went to my local mall in Hilliwick, Massachusetts for the first time in a very long time this weekend. I'm driving up, I see Best Buy, and then right next to it is pickleball experience. And I think this is what's happening across malls is they're putting in recreational spaces to fill the void and people are coming back. Also, if you look at just what else is happening in commercial real estate, you have office buildings that's down 34 % since the 2022 peak self-storage units also down there's not a lot of good places to put your money in commercial real estate right now and you look at malls even though some of them maybe look like these sleeping giants they occupy really expensive and really good real estate in some places so maybe this trade of why malls are coming back is just due to the fact that the dirt underneath them is so valuable and that's why if you're looking for one place to put your money in commercial real estate, you might as well go to the place that owns a lot of land like malls.

20:48Moving on, imagine your most marathon-pilled friend combined with your most lifting-pilled friend. Outside of producing the most insufferable small talk imaginable, you've also created a High Rocks athlete, a rising corner of the fitness world that I want to talk about on today's edition of Toby's Trends. High Rocks has been around for nearly a decade at this point, but has grown into a global phenomenon with 100 races stretching across the globe. It was thrust into the spotlight this week for a rather unfortunate reason, a bout of fecal incontinence suffered by a top athlete at a recent race in Beijing.

21:23High Rocks has apologized for allowing the athlete to continue despite soiling herself, which raised concerns about race hygiene, potential equipment contamination, and how dang hard this race is. High Rocks races all follow the same strict and brutal format. run one kilometer, complete a workout, then do that eight times in a row. By the end, you will have run 8K, pushed and pulled a weighted sled, rode and ski-urged till your hands bleed, done burpees, lunges, and wall ball tosses with a farmer's carry thrown in for good measure. You can empathize how that might cause one to soil themselves.

21:57But it's also catnip for the fitness community with more than 2.4 million participants projected to take part in a race this year. It's angling to become an Olympic sport soon. In the meantime, High Rocks is making a lot of money and entry will cost you between$100 and$200, which doesn't include the race photos for purchase that will inevitably show up on social media. So loyal legions have caught the eye of outside investors with the consumer-focused firm El Cateron set to buy a stake in a deal that values the company close to$700 million. Neil, the number two incident is unfortunate, but the number one reason why high rocks is so big is because it's hard it's social and it leads to pics of you looking sweaty and buff on your instagram i'm very curious to see how many people